The recent reform of European governance: A critical review

Abstract

This paper investigates whether the recent EU governance reform is a step in the right direction and discusses its ability to restore European financial stability. The authors argue that the reform appears incapable of dealing with the factors responsible for the sovereign debt crisis, and they stress the need for financial sector reforms and sound fiscal policies. To that end, the adoption of national fiscal rules seems capable of dealing with the profligacy of governments and tackling the problem of deficit bias. Regarding the introduction of the new Excessive Imbalance Procedure, this article argues that EU authorities should adopt a symmetric approach instead of the one currently being pursued.